Top 10 Questions

Obama’s Home and Student Loan Program Details

Obama’s Student Loan Forgiveness Guide

In October 2011, the Obama Administration proposed two separate “Obama student loan assistance” measures, both of which became available through the Department of Education in January 2012. These measures were put in place with the intent to assist those struggling under overwhelming student loan debt, with the possibility of positively affecting 7.4 million borrowers nationwide.

Utilizing separate money-saving vehicles, one plan offers a 5 percent break on income-based repayments, called “Pay As You Earn;” while the second plan offers a modest interest rate decrease on two or more federal loans that have been consolidated.

To see a more detailed outline of the student loan forgiveness program – visit this student aid site

“Income-Based Repayments,” also known as, “Pay As You Earn”

The first of the Obama student loan assistance plans stepped up a Congressional measure which reduced the maximum required payment on student loans from 15 percent down to 10 percent of discretionary income per annum. This measure, dubbed, “Pay As You Earn,” went into effect in January 2012, instead of 2014 as it was originally slated.

 

  • How “Pay As You Earn” works: Starting in January 2012, monthly student loan payments became based solely on income earned which falls above 150% of the poverty line. For example, a single graduate would make payments on 10% of any dollars made above $16,335, based on the 2011 poverty line, with graduates who are unemployed and without income owing nothing on their monthly payments on their student loans at all.

 

  • Additional benefits: The income-based repayments plan also aims to provide student loan debt assistance by forgiving the debt in 20 as opposed to 25 years, and has the possibility to positively affect roughly 1.6 million debt-slogged student loan borrowers. Students starting loans in 2012 were slated to save hundreds of dollars through the measure, according to U.S. Secretary of Education, Arne Duncan.

Obama Student Loan Assistance Plan 2: Lower Interest Rates Through Loan Consolidation

The second of the Obama Administration’s student loan assistance plans helps borrowers by allowing those with two or more different types of federal loans to consolidate them and earn a slightly lower interest rate of .5%, according to White House domestic policy adviser Melody Barnes.

 

  • How Loan consolidation works: In 2010, the federal government pulled its support from guaranteeing student loans that were made by private banks, and went forward with plans to offer loans to students directly.

The list of private student lenders includes Stafford loans, as well as Nelnet and Sallie Mae. With this Obama Student Loan Assistance plan, the administration seeks to assist student loan borrowers by encouraging those with both types of loan, direct and federally guaranteed, to consolidate their federal loans into direct loans.

While students have been able to consolidate their federally backed loans since 2010, they had little incentive to do so given there was no interest rate difference between Federal Family Education Loans and Direct student loans.

 

Loan consolidation incentives: In response, the Obama Administration is offering, “for a limited time,” the opportunity to save .5% on the interest rate of direct loans resulting from the consolidation of two or more different federally guaranteed loans. This Obama Student Loan Assistance plan could affect roughly 5.8 million borrowers.

Obama’s Home Loan Modification Program – Top 10 Questions

With President Barack Obama’s loan modification program, the Homeowner Affordability and Stability Plan over 7 million homeowners facing foreclosure will be helped. This $75 billion dollar program provides financial incentives to lenders and borrowers to modify their loans and save millions of families homes. There are many questions that we come across daily and have provided you here with the 10 most frequently asked questions.

 Top 10 Questions

 

1. What if I am already facing foreclosure?

If you are already facing foreclosure a loan modification is a great way to stop the foreclosure process. Obama’s loan modification program provides incentives for people in the foreclosure process and those not in it to modify their loans. Every application is reviewed by the lender individually and must meet certain guidelines.

2. How much does a loan modification cost?

A loan modification is free! Many 3rd party companies charge fees in excess of $1500-$3000 and most of them are scams. Your best approach to getting a loan modification is to get educated, purchase an inexpensive do it yourself loan modification kit and apply yourself.

3. I have already applied for a loan modification can I still get a piece of the $75 billion?

Since there is financial incentives in the program for both the lender and the borrower, your lender will be more than willing to consider you under Obama’s loan modification program as long as you meet its guidelines and they are participating in it.

4. What do I have to provide my lender to determine if I qualify for Obama’s loan modification program?

If you have answered yes to the 5 questions on the home page then there is a good chance you will qualify. Your lender will require you to provide paycheck stubs, tax returns, complete income/expense forms and a financial hardship letter. Again, the loan modification kit could prove usefull with its sample financial statements and hardship letter templates. You can also get the free hardship letter template available on here at www.obama-loanmodification.com.

5. What if I am not delinquent on my mortgage?

With Obama’s loan modification plan you do not need to be behind on your mortgage to qualify. However, it is critical that you demonstrate that due to a financial hardship you will not be able to continue making your payments and that it is in the lender and your best interest to receive a modification.

6. Who will qualify for The Homeowner Affordability and Stability Plan loan modification?

There are 5 basic questions that you need to answer yes to, to determine if you qualify:

1. Do you live in the home?

2. Is your current loan amount within the Fannie Mae conforming limits ($625,500 in high cost areas and for other areas it is $417,000)

3. Are your current house payments more than 31% of your gross income?(Loan modification kits can help with all financial calculation your lender may want to see)

4. Are you must be able to prove you have current income?

5. Do you currently have a job?

7. Is my lender required to modify my loan?

No, with the loan modification program participation by companies is optional. However, many of the large companies have agreed to participate since there are financial incentives for both the lender and the borrower.

8. What if my house is worth less than I owe, can I still get help?

In Obamas loan modification plan there are provisions that can reduce the principal balance. This decision will be up to the discretion of the lender, however there is hope that you will be able to reduce your mortgage.

9. What if my loan is owned or serviced by Fannie Mae or Freddie Mac?

Freddie and Fannie are both participating the Homeowner Affordability and Stability plan and if you meet their requirements then you will likely be eligible for a loan modification.

10. Where do I apply for a loan modification under the Homeowner Affordability and Stability Plan?

You can apply at your lender. The first step in the process is gathering the required information that they will be looking for, writing a hardship letter and then contacting them to establish a relationship and begin the process of getting your loan modified.

Many more questions have been asked and answered in the best resource we have found for doing the loan modification yourself, the Complete Loan Modification kit provides all the resources necessary to successfully receive a loan modification under President Obama’s loan modification program.

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8 Comments »

  1. Comment by Foster — June 29, 2009 @ 10:59 pm

    I received a loan modification through Countrywide. Instead of lowering my interest rate, the offered me a plan where my monthly payments apply only toward the interest owed on the loan. When I disagreed with their offer, they told me to take it or leave it. They also told me that if I did not sign and return the new contract by a specific deadline, I would lose my house. Can financial institutions do this to people? The government has set aside funding to pay banks for loan modifications, if my payments are only going toward my high interest rate, I am funding my loan modification as well. I need to lower my interest rate of 9.350%. What should I do?

  2. Trackback by stop home foreclosure — July 14, 2009 @ 12:36 am

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    U. S. home prices were down 18. 1% in the year ended April, according to the national Case- Shiller home price index released Tuesday. On a month- to- month basis, prices in 20 selected cities fell 0. 6% in April, with declines in 11 cities. Still, the…

  3. Comment by Betty R — January 25, 2010 @ 4:07 pm

    I have been trying to modify for 1 year. I am currently 15 months behind. No Notice of Default has been filed yet. My current Loan Balance is $463,000 my current rate is 8.75% adajustable. I am $53,000 in arrears. My current value is 300,000. My monthly gross income is $5,600 and my P and I payment is $3,427.17 this does not include my taxes and insurance. do I qualify for the HAMP Program through my servicer? How would I calculate the NPV Test?.
    Please help me understand.

  4. Comment by Brenetta Smith — March 22, 2010 @ 3:25 pm

    I received a trial period payment and have continued to make payments. The payments were semi affordable. Now the modification contract is here and the company has increased the payments to what they were before when the hardship began and has tacked on 50,000 more of interest and loan adjustments from past loan agreement, eventhough they have wiped out the last agreement and given me a brand new loan that will not change in five years,but if i agree will be for the duration of loan. why do i have to pay 50 grand in past adjustments and interest on a brand new loan? Obamas plan has secured the banks with bailout money. Why are we still paying the mtge co when they have been paid already. Shouldnt the loan be what the market says it is worth at present?

  5. Pingback by Obama’s Federal Loan Modification Program – How to Qualify « Wells Loan Modification — October 3, 2010 @ 4:26 pm

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  6. Comment by janet — December 30, 2010 @ 3:14 am

    If you have tried everything and the loan company has messed up your first try on modificationa and then you don’t qualify for the Presidents modification, what else can you do.I have been working on this since 2009. Finished all my modified payments they put me on but then due to their Processor telling me to mail in the new paperwork in the envelope she sent instead of faxing, I got cancelled out of that one and have tried to start over on the govenrment one and don’t qualify. All the modified payments I made now had put me farther behind and they have served me with lawyer papers on foreclosure.

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  8. Pingback by Top 10 Questions « obamaloanplan — October 8, 2011 @ 4:09 am

    [...] President Barack Obama’s loan modification program, the Homeowner Affordability and Stability Plan over 7 million homeowners [...]

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